Talks aimed at resuming Iraqi oil exports to Turkey have once again failed to reach an agreement, marking the second deadlock in a week despite increased pressure from Washington. Discussions have stalled over the resumption of oil flows through the Iraq-Turkey pipeline, which ceased over two and a half years ago.
The halt followed a ruling by the International Chamber of Commerce (ICC) that Turkey must pay Iraq $1.5 billion in damages for unauthorized oil exports by the Kurdistan Regional Government (KRG). The stoppage of Iraq’s 450,000 barrels per day (bpd) export capacity has significantly impacted the KRG’s finances, resulting in an estimated loss of billions of dollars. Iraq, as OPEC’s second-largest oil producer, depends heavily on crude oil exports, with oil revenues accounting for more than 90 percent of the country’s income.
Despite these setbacks, there are positive developments for Iraq’s oil sector. British oil and gas giant BP Plc has agreed to develop the Kirkuk oil and gas fields under a profit-sharing model, with the fields currently producing 245,000 bpd, according to Iraqi oil ministry officials.
In another major development, French multinational TotalEnergies has reached an agreement with the Iraqi government to move forward with a long-delayed $27 billion energy project. Total had originally signed a deal in 2021 to build four major oil, gas, and renewable energy projects in southern Iraq. The project faced delays due to political disputes over terms. However, Iraq has now agreed to a smaller 30% stake, signaling potential for renewed foreign investment in the country.
Total’s CEO, Patrick Pouyanne, expressed optimism about the agreement, telling, “The government of Iraq confirmed the whole contract, no modification at all… so that was for me more than good news.” With a period of relative stability in Iraq, foreign investment appears to be making a tentative return, offering hope for the future of the nation’s energy sector.